Effectuation Theory and The Covid-19 Pandemic

A.Banu Goktan, Ph.D.

Coronavirus marked the year 2020 with its effect on the global economy in general and businesses in particular. Sarasvathy (2001) in her seminal piece proposed effectuation as a set of behaviors entrepreneurs use in the face of uncertainty and Berends et al. (2014) added that effectuation concerned actions under resource constraints, both defining effectuation as the model to be followed in an environment such as the COVID-19 pandemic where circumstances determine the path entrepreneurs take (Berends et al., 2014). Effectuation is a dynamic and interactive process (Sarasvathy, 2001) where entrepreneurs focus on what can be achieved in the short term with the resources at hand, utilizing pre-commitments and experimenting with new products and processes within the constraints of what the entrepreneur can afford to lose (Fisher, 2012). Anecdotal evidence from the pandemic suggest that larger organizations, organizations with significant investments in fixed assets, organizations that relied on a single customer or a single type of customer and organizations which operated in highly regulated environments found it difficult to follow the effectuation logic during the Covid-19 pandemic. While observations provide insight and help draw inferences, future studies should empirically examine the relationships proposed in this study.